But Prince Ali Seraj, the head of the National Coalition for Dialogue with the Tribes of Afghanistan, says he does not know if a trial in the US would satisfy the Afghan people.

"To the Afghan people justice means that the guy gets arrested by the US authorities, handed over to the Afghan authorities, and let the Afghan justice system deal with the situation," he said.

"But knowing the US policy towards allowing ... any member of their troops to be tried in a foreign land, the justice in their eyes is to take this person back to the United States and try him there for his murderous actions here.

"If it is really publicised and the judgment is immediate and the process is immediate and the man actually gets convicted, then I think that would be a positive role among the Afghan people.

"But if he goes over there and he pleads insanity and then he gets off under this insanity plea, that I think will have a very adverse effect among the Afghan people."

Prince Seraj says the Taliban has been exaggerating the death toll from the shooting in order to inflame anti-American sentiment.

"I myself have called several of the prominent tribal elders in Kandahar and I've told them that we should not become a part of the play of the enemy so that they would use us one against the other - that we should stay calm and wait and see what happens," he told ABC's Lateline from Kabul.

"I've also relayed the fact that... the person who did this heinous act is totally insane."

To the Afghan people justice means that the guy gets arrested by the US authorities, handed over to the Afghan authorities, and let the Afghan justice system deal with the situation.

Prince Ali Seraj

The soldier in custody was described by one Washington official as a staff sergeant who was married with three children.

The sergeant had served three tours in Iraq but was on his first deployment in Afghanistan, the official said.

US president Barack Obama called the rampage "tragic and shocking", and Washington has sought to distance the shootings from the efforts of the 90,000-strong US force in Afghanistan.

Relations between the two countries were already tense after copies of the Muslim holy book, the Koran, were inadvertently burned at a NATO base last month.

In the five days of riots that followed the burning of the Korans, 29 Afghans and six American soldiers were killed.

But Prince Seraj says the shooting in Kandahar may not see the same response.

"The Koran incident was something completely different because Koran is the common religion in Afghanistan... it goes across boundary lines, it goes across ethnic lines," he said.

"As far as this incident in Kandahar is concerned, because it's localised to one province, we may see more of a reaction in Kandahar than we would say somewhere in Herat or somewhere in some of the other provinces.

"But nevertheless, we should not be surprised if there is reaction against this type of an action."

He says the US would be playing into the hands of the Taliban if it responded to the breakdown in relations between it and Afghanistan by bringing forward its withdrawal.

"By packing up and leaving they are going to leave a very volatile area with really dangerous people who are hell-bent not only on creating problems for Afghanistan, but on creating problems to the rest of the world," he said.

Former Afghan deputy foreign minister Mahmoud Saikal, also a former ambassador to Australia, says his country has been shocked by the shootings.

"Unfortunately Afghanistan is a country of rumours and if we don't act very quickly, rumours and emotions take over," he said.

"Naturally, this event has got dramatic impact on various issues. Number one, it gives ammunition to the Taliban and to the other armed opposition groups and to Al Qaeda to tell the people of Afghanistan and the people of Pakistan that, 'We told you so. The Americans had come to Afghanistan to kill the Afghan people and here we go'."

Mr Saikal says the attack could lead to a more bloody withdrawal.

I'm afraid if the withdrawal takes place in a shorter period of time than scheduled, that will leave a vacuum in Afghanistan that will give oxygen to terror to breathe.

Mahmoud Saikal

"This is happening at a time when we're all working together to see a smooth transition and see the withdrawal of the foreign forces in Afghanistan in a peaceful way and a takeover of the Afghans and somehow the birth of a legitimate government in 2014 following a transparent election," he said.

"Naturally these things give excuses to everybody to expedite the withdrawal, and I'm afraid if the withdrawal takes place in a shorter period of time than scheduled, that will leave a vacuum in Afghanistan that will give oxygen to terror to breathe in Afghanistan."

Afghan president Hamid Karzai, whose relationship with his Western backers is fraught at the best of times, condemned the rampage as "intentional murders" and demanded an explanation.

His office released a statement quoting a villager as saying "American soldiers woke my family up and shot them in the face".

Australia's Chief of Defence General David Hurley has described the killing as a terrible tragedy.

He told ABC's PM that he is confident Australian forces can continue to work with the Afghan people, but acknowledged the attack makes things harder.

"If the degree of difficulty, if this was a diving competition, it's just gone up a couple of points and, compounded with the recent incidents of the burning of the Koran, these will pose significant challenges, I think, in the relationships with the Afghan people," he said.